Digital divide among UK business is holding back the economy

A digital divide is opening up across the British economy, with just over half (55%) of “pioneer” firms adopting digital technologies and processes, while the other half (45%) are falling behind. This is according to new research by the CBI and IBM.

Despite the UK taking top place globally for e-commerce and fifth place for the availability of technology, it ranks only fourteenth in the world for company-level adoption of digital technology, with many companies struggling to digitise their businesses at the rate of peers in other countries.

Companies cite a mix of connectivity challenges and security concerns as barriers to digital adoption, but predominantly they are hindered by a lack of appropriate skills inside their business (42% of firms) and an unclear return on investment (33%).

The problem is not lack of conviction about the potential impact. Nearly all firms believe that digital technology has the ability to revolutionise the business landscape, driving productivity (94%), growth and job creation, and almost three quarters (73%) see improved customer satisfaction and experience as its biggest benefit. To take advantage of digital technology across the economy, the CBI, the UK’s largest business group recommends that firms:

Appoint a Chief Digital or Technology officer to the senior executive team to drive digital strategy and execution

Increase the age and skills diversity of boards and board advisers, drawing on the expertise of a new generation of ‘digital natives’.

Carolyn Fairbairn, CBI Director-General, said:

“Businesses globally are in the throes of an extraordinary digital revolution that is transforming productivity and creating a new generation of winning companies. But in the UK, too many firms are being left behind. While pioneering firms are seizing digital opportunities, nearly half are struggling – a growing digital divide that is threatening UK competitiveness.

“It’s vital that businesses in all sectors – from manufacturing to retail – truly understand digital technology’s potential, from the boardroom to the shop or factory floor. Giving digital a human face by appointing a Chief Technology Officer will help businesses build the long-term digital strategies that will be critical to their futures.

“And by harnessing the expertise of the generation at the heart of the digital revolution, firms will be better able to make the right investments for their digital future.”

David Stokes, Chief Executive of IBM UK and Ireland, said:

"Unlike previous technology shifts, digital is impacting the way we work, play and go about our daily lives. It also presents both a challenge and opportunity for every business - across all sizes and sectors.

“Digital offers not only the opportunity for much needed productivity gains alongside a new canvas upon which organisations can innovate to drive new levels of growth.

“As one of the leading digital economies in the world, the UK finds itself with a tremendous opportunity and responsibility for business leaders to sustain and grow our leadership in the world. This is an opportunity that we in the business community should be hugely excited to face together."

Other findings from the CBI/IBM research include:

More than a quarter of pioneer firms (28%) have already invested in advanced artificial intelligence and cognitive technologies over the past year. ‘Pioneer’ firms tend to have a long term approach and vision to digital strategy

Only 9% of businesses on the other side of the digital divide have done so, but 16% plan to do so in the next year.

The CBI also wants to see businesses work more closely with each other to share ideas. For example, more digitally advanced and proficient firms could run digital clinics and offer coaching for those companies struggling to get started.

Are you a compassionate, open-minded leader, or are you distracted by uncertainty and technology? CBI’s Workplace 2030 series of events tackled the question of how to guide staff through difficult times